# Universal Imports Agency v. The Chief Controller of Imports

- **Citation:** [1962] 2 S.C.R. 410
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Case number:** Writ Petition No. 36 of 1960
- **Bench:** P. B. Gajendragadkar, A. K. Sarkar, K. N. Wanchoo, K. C. Das Gupta, N. Rajagopala Ayyangar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/universal-imports-agency-v-the-chief-controller-of-imports-2263
- **Pages:** 24

## Headnote

French Establishments-Agreement to import goods-De facto
transfer of administration to India·-lmporter, if liable to pay
penalty and customs duty-French Establishments (Application of
Laws) Order, r954, cl. (6)-French Establishments (Administration)
Order, r954--Sea Customs Act, r878 (8 of 1878), s. 167(8).
The petitioners entered into agreements with certain
British firms for the import of cycles and cycle-parts to Pondicherry, which was then a French Establishment, in the manner
provided by French law. The goods arrived at Pondicherry after
the French Establishments had merged into India on the basis
of the Agreement dated October 2r, r954, between the Union of
India and France, which was to be operative from November r,
r954.
By virtue of the said Agreement two Orders, dated
October 30, r954, were issued by the Ministry of External
Affairs under the Foreign Jurisdiction Act, rg.17, being S.R.O.
3314, the French Establishments (Administration) Order, r954,
and S.R.O. 33r5, the French Establishments (Application of Laws)
Order, 1954· The first saved the operation of the pre-existing
French Law except in so far as it was repealed by the second,
which extended to French Settlements certain Indian Statutes·
specified in the Schedule and amongst these were the Sea Customs Act, r878, the Tariff Act, r934, the Import and Export
(Control) Act, r947, and the Foreign Exchange Regulation Act,
r947. These Orders came into force on November r, 1954· On the
same day the Government of India, by a Notification, appointed
a Controller of Imports and Exports for the French Settlements.
Paragraph 4 of this notification called upon the licence-holders
under the French Law to apply to the Controller for validation
of the licences held by them. Paragraph 17 of the Agreement,
while saving import of goods validly ordered prior to the de facto
transfer, made such goods liable to customs duty. As the goods
arrived at Pondicherry on December 4, r954, the Customs
Authorities took the view that the import was in contravention
of the Indian Statutes and ordered the petitioners to pay a
penalty under s. r67(8J of the Sea Customs Act, as also customs
dutv. The Central Board of Revenue on appeal upheld the
order and the Central Government in revision, while affirming
that decision, reduced the penalty. Paragraph 6 of S.!~.O. 33r5
provided as follows,-
2 S.C.R. SUPREME COURT REPORTS
411
"Unless therefore specially provided in the schedule all
1961
laws in force in the French Establishments immediately before
the commencement of this order which correspond to the enactFrench India
ments specified in the schedule shall cease to have effect, save as Importing Correspects things done or omitted to be done before such comporation, Delhi
mencement'',
v.
The question for determination was whether the petitioners Chief Controller of
were liable to pay the penalty under s. 167(8) of the Sea Customs Imports & Exports
Act, and also the Customs Duty.
Held, (per curiam), that in view of the decision of this Court
in Universal Imports Agency v. The Chief Controller of Imports and
Exports, the petitioners were not liable to pay the penalty under
s. i67(b) of the Sea Customs Act.
Universal Imports Agency v. The Chief Controller of Imports
and Exports, [1961] 1 S.C.R. 305, followed.
Per Gajendragadkar, Wanchoo and Ayyangar, Jj.-That
decision of this Court, however, did not apply to or absolve the
petitioners from the liability to pay the customs duty.
In order to determine the exact scope of the words "things
done" occurring in para. 6 of S.R.O. 3315, the two orders, S.R.O.
3314 and S.R.O. 3315 must be read along with para. 17 of the
Agreement and para. 4 of the Notification of November l, 1954,
appointing the Controller and so determined there could be
no doubt that the saving clause afforded no protection to the
petitioners so far as their liability to pay the customs duty was
concerned.
Per Sarkar and Das Gupta, JJ.-The words "things done"
occurring in para. 6 of S.R.O.

## Text

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I96I
Aptil 26.
410
SUPREME COURT REPORTS
M/s. FRENCH INDIA IMPORTING
CORPORATION, DELHI
v.
(1962]
THE CHIEF CONTROLLER OF
IMPORTS & EXPORTS AND OTHERS.
(P. B. GAJENDRAGADKAR, A. K. SARKAR,
K. N. WANCHOO, K. C. DAS GUPTA and
N. RAJAGOPALA AYYANGAR, JJ.)
French Establishments-Agreement to import goods-De facto
transfer of administration to India·-lmporter, if liable to pay
penalty and customs duty-French Establishments (Application of
Laws) Order, r954, cl. (6)-French Establishments (Administration)
Order, r954--Sea Customs Act, r878 (8 of 1878), s. 167(8).
The petitioners entered into agreements with certain
British firms for the import of cycles and cycle-parts to Pondicherry, which was then a French Establishment, in the manner
provided by French law. The goods arrived at Pondicherry after
the French Establishments had merged into India on the basis
of the Agreement dated October 2r, r954, between the Union of
India and France, which was to be operative from November r,
r954.
By virtue of the said Agreement two Orders, dated
October 30, r954, were issued by the Ministry of External
Affairs under the Foreign Jurisdiction Act, rg.17, being S.R.O.
3314, the French Establishments (Administration) Order, r954,
and S.R.O. 33r5, the French Establishments (Application of Laws)
Order, 1954· The first saved the operation of the pre-existing
French Law except in so far as it was repealed by the second,
which extended to French Settlements certain Indian Statutes·
specified in the Schedule and amongst these were the Sea Customs Act, r878, the Tariff Act, r934, the Import and Export
(Control) Act, r947, and the Foreign Exchange Regulation Act,
r947. These Orders came into force on November r, 1954· On the
same day the Government of India, by a Notification, appointed
a Controller of Imports and Exports for the French Settlements.
Paragraph 4 of this notification called upon the licence-holders
under the French Law to apply to the Controller for validation
of the licences held by them. Paragraph 17 of the Agreement,
while saving import of goods validly ordered prior to the de facto
transfer, made such goods liable to customs duty. As the goods
arrived at Pondicherry on December 4, r954, the Customs
Authorities took the view that the import was in contravention
of the Indian Statutes and ordered the petitioners to pay a
penalty under s. r67(8J of the Sea Customs Act, as also customs
dutv. The Central Board of Revenue on appeal upheld the
order and the Central Government in revision, while affirming
that decision, reduced the penalty. Paragraph 6 of S.!~.O. 33r5
provided as follows,-
2 S.C.R. SUPREME COURT REPORTS
411
"Unless therefore specially provided in the schedule all
1961
laws in force in the French Establishments immediately before
the commencement of this order which correspond to the enactFrench India
ments specified in the schedule shall cease to have effect, save as Importing Correspects things done or omitted to be done before such comporation, Delhi
mencement'',
v.
The question for determination was whether the petitioners Chief Controller of
were liable to pay the penalty under s. 167(8) of the Sea Customs Imports & Exports
Act, and also the Customs Duty.
Held, (per curiam), that in view of the decision of this Court
in Universal Imports Agency v. The Chief Controller of Imports and
Exports, the petitioners were not liable to pay the penalty under
s. i67(b) of the Sea Customs Act.
Universal Imports Agency v. The Chief Controller of Imports
and Exports, [1961] 1 S.C.R. 305, followed.
Per Gajendragadkar, Wanchoo and Ayyangar, Jj.-That
decision of this Court, however, did not apply to or absolve the
petitioners from the liability to pay the customs duty.
In order to determine the exact scope of the words "things
done" occurring in para. 6 of S.R.O. 3315, the two orders, S.R.O.
3314 and S.R.O. 3315 must be read along with para. 17 of the
Agreement and para. 4 of the Notification of November l, 1954,
appointing the Controller and so determined there could be
no doubt that the saving clause afforded no protection to the
petitioners so far as their liability to pay the customs duty was
concerned.
Per Sarkar and Das Gupta, JJ.-The words "things done"
occurring in para. 6 of S.R.O. 3315 as construed by this Court in
Unive1'al Imports Agency v. The Chief Controller of Imports
and Exports, cover the petitioners' liability to pay not only the
penalty but also the customs duty and so long as that decision
stands, it has to be followed.
Universal Imports Agency v. The Chief Controller of Imports
and Exports, [1961) l S.C.R. 305, discussed.
There is nothing in the Order S.R.O. 3315 itself which
renders the saving provision in para. 6 inapplicable to the levy
of customs duty nor does any later law deprive the petitioners
of its protection.
There can be no justification for reading into
the Order S.R.O. 3315 anything to the contrary contained in
para. 17 of the Articles of the Inda-French Agreement.
ORIGINAL JURISDICTION:
Writ Petition No. 36 of
1960.
Petition under Art. 32 of the Constitution of India
for the enforcement of fundamental rights.
N. 0. Chatterjee, D. R. Prem, R. Ganapathy Iyer
and G. Gopalakrishnan, for the petitioner.
412
SUPREME COURT REPORTS
(1962]
1961
B. Sen, R. H. Dhebar and T. M. Sen, for the respondents.
French India
Impo>ting Cor~
1961. April 26.
The Judgment of Gajendraporatwn, De/h• gadkar, Wanchoo and Ayyangar, J J., was delivered by
Chief c0: 1, 011,, of Ayyangar, J., and that of Sarkar and Das Gupta, JJ.,
Imports & Exports was delivered by Das Gupta, J.
AYYANGAR, J.-This is a petition under Art. 32 of
Ayyangar f·
the Constitution praying for a writ, order or direction
in the nature of certiorari calling for the records relating to the levy of customs duty and penalty on certain cycles and cycle-parts imported by the petitioners,
to quash the said order and for a direction to the respondents to restore and refund to the petitioners the
customs duty and the penalties realised from them for
releasing their goods. The Chief Controller of Imports
and Exports, Pondicherry, The Collector of Customs,
Pondicherry, The Central Board of Revenue, New
Delhi, Chief Commissioner, Pondicherry and the
Union of India have been made respondents to the
petition.
From the nature of the order sought and the array of
the respondents it would be apparent that the matter
involved in this petition is whether the respondents
were justified in (a) levying customs duties on the
goods imported by the petitioner and (b) imposing a
penalty on them for effecting these imports.
We shall now briefly narrate the facts necessary to
understand the points arising for decision. The petitioners who are citizens of India placed an order on
August 6, 1954, with certain firms in the United
Kingdom for the despatch of cycles and cycle parts to
Pondicherry-which was at that date the principal
French establishment in India.
According to the
law which then obtained in Pondicherry territory,
merchants desiring to do business there had to have
"a patent" or licence from the authorities for carrying
on such business. The petitioners applied for such a
"patent" to the authorities on August 14, 1954, and
they were granted one on August 18, which was to be
effective from August 1, 1954. The order placed with
U. K. firms was accepted and the goods covered by
the indents were shipped from the U. K. ports on
2 S.C.R. SUPREME COURT REPORTS
413
October 11, 1954. The foreign exchange needed for
'96'
effecting this import could under the French Law have
F.enc!i India
been obtained either from or on the authorization of Impo.ting Co•-
the Head of the Department of Economic Affairs at po>ation, Delhi
Pondicherry or by what has been termed purchase in
v.
the open market. In pursuance of these facilities the Chief Confroll" of
moneys required were transmitted through bankers Impods & Exports
who made payments on behalf of the petitioners in
Ayyangar 1.
the United Kingdom and the goods arrived in Pondicherry on December 4, 1954, the Bill of Entry being
presented to the Customs Authorities for clearance on
the 17th of that month.
Mean while, political changes took place in the
governance of Pondicherry and other French settlements.
An agreement was entered into between the
Governments of the Union of India and of France
under which the administration of the French Settlements, including Pondicherry, was ceded to the Union
Government. This agreement which was signed on
behalf of the two Governments on October 21, 1954,
was to be effeotive from November 1, 1954. On October 30, 1954, two notifications were issued by the
Ministry of External Affairs in pursuance of the agreement dated October 21, 1954, between the two
Governments. They were respectively S.R.O. 3314
and S.R.O. 3315.
As the questions arising for decision in the petition turn on the proper construction
and legal effect of these two notifications, it would be
necessary to deal with them in some detail, but for
the purpose of the narration of facts, it would be
sufficient to say that while S.R.O. 3314 saved the
operation of the pre-existing French Law except in so
far as it had been affected by S.R.O. 3315, the latter
repealed such laws to the extent they were inconsistent with the Indian enactments set out in the Schedule whose operation was extended to Pondicherry
and the French settlements.
Among the Indian
enactments so applied to Pondicherry were the
Foreign Exchange Regulation Act, 1947, the Import
and Export (Control) Act, 194 7, the Sea Customs Act,
1878, and the Tariff Act, 1934.
53
414
SUPREME COURT REPORTS
[1962]
I961
The Bill of Entry was, as stated earlier, presented
to the Customs Authorities at Pondicherry on DecemFrench Tndia
ber 17, 1954, and it would be seen that by that date
Importing Corporation, Delhi Pondicherry was being administered as part of the
v.
Union territory with the Indian laws referred to opeChief Contrclier of rating in the area. The customs authorities at Pon-
·Imports & Expo"' dicherry took the view that as the consignment im-
-
ported by the petitioners did not reach the port of
Ayyangar ].
b c
b
Pondicherry
eiore Novem er 1, 1954, when the
Union Government took over the territory, the importation was without authorization of the Indian law
and therefore in contravention of the Import and Export Control Act and the Orders issued therein, the
Sea CLJstoms Act, the Tariff Act and the provisions of
other relevant enactments. After a notice to the
petitioners to show cause why the goods should not
be treated as having been imported without a licence
granted under the Import and Export (Control) Act, the
Customs authorities at Pondicherry after considering
their explanation decided against the petitioners and
directed them to clear the goods on payment of duty
and of a penalty which was levied under s. 167(8) of
the Sea Customs Act.
This order was passed on
March 3, 1955. The petitioners thereupon preferred
an appeal to the Central Board of Revenue who dismissed it by their order dated July 31, 1956, and
thereafter the petitioners filed a revision to the Central Government who dismissed it by their order
dated January 8, 1957, but reduced the penalty imposed. It is in these circumstances that the petitioners
have approached this Court for the reliefs set out at
the beginning of this judgment.
The following facts would emerge from the above
narration: (l) that firm contracts had been entered
into by the petitioners with the foreign-sellers long
before November 1, 1954-the date of the transfer of
Pondicherry, (2) that the petitioners had the authorization of the French law by holding the "patent"
granted to them on August 18, 1954, and effective
from August l, 1954, to carry on business in Pondicherry, (3) that the foreign-exchange requirements for
effecting the importation had been provided for by the
2 S.C.R. SUPREME COURT REPORTS
415
petitioners in a manner authorized by the French law,
r961
(4) the goods, however, arrived in Pondicherry after
French India
the date of the de facto transfer. In these circumsImporting Cor·
tances the questions raised for decision are: (l) wheporation, Delhi
ther under the terms of the relevant notifications, to
v.
which we shall immediately refer, the importation was Chief Controll" of
unauthorized for want of an import licence so as to Imports & Export•
render the petitioners subject to the levy of a penalty
Ayyanga' J.
under s. 167(8) of the Sea Customs Act, (2) whether
the petitioners have a right under the relevant notifications to have the imported goods cleared from the
Pondicherry port without the payment of the customs
duty leviable under Indian law in the area from and
after November 1, 1954.
We have already referred to the two notifications by
the External Affairs Ministry, the details of which we
shall now proceed to state. By virtue of the jurisdiction obtained by the Union Government under the
agreement between the two Governments dated October 21, 1954, S.R.O. 3314 was issued in exercise of the
powers conferred by the Foreign Jurisdiction Act,
1947, and came into force on November 1, 1954, when
the agreement became effective. Its principal function was to provide for the continuance of the law
which previously prevailed in Pondicherry except in
so far as it was varied by other notifications issued by
the Union Government extending Indian Laws to
that territory. Paragraph 5 of S.R.O. 3314 provided:
"5. All laws in force in the French Establishments
or any part thereof immediately before the commencement of this order and not repealed by paragraph 6 of the French Establishments_ (Application
of Laws) Order, 1954, shall continue to be in force
until repealed or amended by a competent authority."
The other provisions of this order are designed with
the same objective, viz., the continuance of laws until
other provisions are made by a competent Legislature
or authority. The provisions contained in S.R.0.
3315 are of more immediate consequence for the purpose of this petition. Paragraph 3(1) ofthis order
provided:
I96I
French India
Importing Corporation, Delhi
v.
Chief Controller of
Imports &- E:rports
Ayyangar j.
416
SUPREME COURT REPORTS
[1962)
"The enactments specified in column 3 of the
schedule as in force before the commencement of
this order are here by applied to, and shall be in
force in the French Establishments subject to:
(a) ........ ····· ................................................. .
(b) .............................................................. .
(c) The subsequent provisions of the order."
Paragraph 6 which was in the nature of a saving
clause ran:
"Unless therefore specially provided in the
schedule, all laws in force in t.he French Establishments immediately before the commencement of
this order, which corresponds to the enactments
specified in the schedule shall cease to have effect,
save as respects things done or omitted to be done
before such commencement."
Among the laws extended to Pondicherry under
S.R.O. 3315 were, as already noticed, the Sea Customs
Act, 1878, the Reserve Bank of India Act, 1934, the
Imports and Export.s Trade (Control) Act, 1947, the
Foreign Exchange Regulation Act, 1947, and the
Indian Tariff Act, 1934. In the absence of the saving
contained in the last words of paragraph 6 of S.R.O.
3315 "as respects things done or omitted to be done
before such commencement", the previous French law
or the authorizations or permits obtained thereunder,
would have become repea.Ied or exhausted and the
import to be legal would have to be in conformity
with the laws applied to the territory by virtue of
paragraph 3 with the result that the orders of the
Customs Authorities in the present case could not be
open to challenge.
The questions therefore are whether this saving pro.
tects the petitioners from: (a) the liability to the
penalty, and (b) from payment of customs duty. We
shall deal first with the levy of the penalty. This
matter is wholly concluded in favour of the petitioner
by the judgment of this Court in Universal Imports
Agency v. The Chief Controller of Imports and Exports (' ).
There, as here, a contract had been entered
into with a foreign supplier for the despatch of goods
(1) [1961] 1 S.C.R. 305.
2 S.C.R. SUPREME COURT REPORTS
417
to the port of Pondicherry in the months preceding
z96z
the transfer. The goods however arrived after N ovemFrench India
ber 1, 1954, and the customs authoriti~s acting under Importing corthe provisions of the se·a Customs Act, treated the poration, Delhi
import as unauthorized, and adjudged the goods to
v.
confiscation and also inflicted a fine.
Petitions were Chief Cont'°ll" 0!
then filed under Art. 32 for quashing these orders oflmport'.!:__Exports
confiscation and fine and for directing the return of
Ayyangar J.
the goods. It may be mentioned that the present
petitioner was an intervener in the petitions the11
before this Court. This Court held that the words
"things done" in paragraph 6 of S.R.O. 3315 were
comprehensive so as to include a contract effected
before November 1, 1954, though its legal effect and
consequence projected into the post-transfer period
and the goods were imported only after November 1,
1954.
The petitioners then before the Court having
authority under the French law which prevailed before
November l, 1954, to import the goods and having
placed the orders and effected the imports in pursuance of that law, this Court held that the imported
goods cGuld not, notwithstanding that they were
actually brought into the territory after November 1, 1954, be confiscated on the ground that they
were imported without a licence required under the
Imports and Exports (Control) Act and the Sea Customs Act.
Mr. Sen-learned Counsel for the respondent-urged
some points of distinction between the facts in the
Universal Imports Agency's case(') and the case now
before us, but having examined them we find there is
no substance in the argnment. Learned Counsel submitted that in the present case the import was effected not by opening Letters of Credit but by payment
by bankers' draft and secondly, that the foreign
exchange required for payment to the U. K. supplier
was met in the present case by open market purchases
and not by the purchase of foreign exchange from
French Banking Establishments. In our opinion,
these are wholly immaterial. Learned Counsel had to
admit that there was no legal requirement to have a
(1) [1961] l S.C.R. 305.
418
SUPREME COURT REPORTS
[1962]
'96'
Letter of Credit and also that it was not in contravenFrench India
tion of French law which prevailed before NovemImporting Cor- ber 1, 1954, to obtain foreign exchange requirements
poration, Ddhi by what are termed "open market purchases". In
.
v.
fact, in the case of the Universal Imports Agency(1)
Chief Controller of the orders impugned were passed and were sought to
Imports &- Exports b
d b "
h' C
h
_
e supporte
eiore t 1s ourt on t e ground that the
Ayyangar J,
foreign exchange requirements were met by "open
market purchases" and that in consequence the
importation was not authorized by the French law,
and this contention was expressly negatived. We
therefore hold that the petitioners are entitled to
relief so far as the petition relates to the quashing of
the order imposing the penalty and for a direction to
refund the same.
We now proceed to examine whether the claim of
the petitioners that they are entitled to import the
goods without payment of duty is justified by the saving contained in the last words of paragraph 6 of
S.R.O. 3315. Mr. Chatterji-learned Counsel for the
petitioners-had to admit that this matter was not the
subject of decision in Univeral Imports Agency's
case (1).
Nor is it a matter for surprise that it was
not, because the petitioners then before this Court
had never objected to the payment of the duty, and
indeed the request they made to the Customs Authorities and which was rejected, which led to the petition, was that the authorisation which they had
under the French law should be revalidated by the
Indian Customs Aut.horities so as to permit the importation on payment of normal duty as if the same were
licensed under the Import and Export (Control) Order;
and that on payment of the duty they were entitled
to a customs clearance under ss. 87 and 89 of the Sea
Customs Act. This being the nature of the controversy
raised in this Court, the petitioners relied on Art, 17
of the Articles of Agreement between the two Governments, to which we shall advert later, in support of
their submission that while the Indian authorities
were entitled to levy such customs duties as were fixed
under law for the several articles imported, the import
(•) [1961] 1 S.C.R. 305,
2 S.C.R. SUPREME COURT REPORTS
419
itself should be treated as authorised by the previous
r96r
law whose operation was continued by the last words
French India
of cl. 6 of S.R.O. 3315 of 1954.
Importing CorFurther, as we shall presently show, there are pasporation, Delhi
sages in the judgment of Subba Rao, J., who spoke
v.
for the majority, that on an importation effected after Chief Controller'
November 1, 1954, customs duty would have to be Imp°''' & Expor
paid according to the rates fixed under the relevant
Ayyangar J.
Indian legislation. The submission of Mr. Chatterji
however was that this relief which he claimed followed logically from the reasoning of Subba Rao, J., and
in particular he relied on the following passage:
" ......... A purchase by import involved a series of
integrated activities commencing from the contract
of purchase with a foreign firm and ending with the
bringing of the goods into the importing country
and the purchase and resultant import formed parts
of a same transaction. If so, in the present case the
bringing of the goods into India and the relevant
contracts entered into by the petitioners, with the
foreign dealers.formed parts of the same transaction.
The imports, therefore, were the effect or the legal
consequence of the 'things done', i. e.,. the contracts
entered into by the petitioners with the foreign
dealers before merger."
The argument of the learned counsel based on this
passage was on the following lines: This Court has
held that it is the agreement concluded with the
foreign seller under which goods are contracted to be
imported, which constituted the "thing done".
The
legal consequence of that "thing done" was the act of
importation, because that was the object and purpose
of the contract, so far as the buyer was concerned.
This Court has held that the previous authorization
by the French law, as it were, projected into the posttransfer period so as to justify the importer claiming
that the importation was authorized and this is the
ratio of the decision. But this does not, learned
counsel urged, exhaust the entirety of the rights of
the importer. The previous French law authorized
the import into a territory which was "a free port".
When therefore the importation was made by virtue
420
SUPREME COURT REPORTS
[1962]
1961
of the authorization contained in the previous law, its
effect should extend not merely to justify the claim to
French India
Impoding Cor- have the import treated as one authorized under the
porntion, Delhi relevant Indian law, but logically also as entitling the
v.
party to effect the importation without pn.yment of
Chfrf Controller of customs duty.
Impods & Exp,.ts
We find ourselves unable to accept this argument.
Ayyangar 1.
The expression "free port" in the case of Pondicherry
merely meant freedom from restriction as to importation in the shape of licence, etc., and not a complete
absence of duties leviable on importation. But that
apart, if the submission of the learned counsel amounted to saying that the point about the exemption of
the petitioner from payment of customs duty is also
covered by the decision of this Court in Universal Imports Agency's case('), we consider it wholly unjustified.
As we have already shown, the liability to pay
customs duty was admitted by the petitioner and the
reasoning by which he sought relief in this Court proceeded on the basis that such duties were exigible.
Besides, the entire reasoning of Subba Rao, J., was
directed to show that the authorization under the
French law to effect the import should be held to protect the petitioners then before the Court from being
treated as having imported goods without a licence
under the Import and Export (Control) Act, and that
is why in the penultimate paragraph of the order the
conclusion reached is thus set down:
"We would therefore hold that paragraph 6 of
the order saves the transaction entered into by the
petitioners and that the respondents had no rights
to confiscate their goods on the ground that they were
imported without licence."
It is in this context that the observations extracted earlier on which Mr. Chatterji relies have to be
understood. Besides, there are passages in the judgment which expressly refer to the fact that goods
imported after November l, 1954, would be liable to
be charged duty under the relevant Indian fiscal
statute. In mak:.ng this observation we have in mind
the reference by the learned Judge to the Notification
(1) (1961] l S.C.R, 305.
2 S.C.R. SUPREME COURT REPORTS
421
of the Central Government dated November 1, 1954,
r96r
and to the terms of Art. 17 of the Articles of Agreehench India
ment dated October 21, 1954, between the two GovernImporting Garments (to both of which we shall advert later). The poration, Delhi
decision of this Court is not, therefore, an authority
v.
to support the petitioner on the point regarding the Chief Co~lroller of
right to import without payment of duty and we have Impo.ts"' Exports
lo deal with the matter on the footing that it is res
-
integra.
Nor can the plea based on the logic of the ratio of
the decision in the Universal Imports Agency's case(')
assist Mr. Chatterji to any material extent, because
the content of the saving as respects "things done",
must ultimately be determined not by any interpretation of these two words in vacuo, but in the context
of the entire scheme of the two S. R. Os. read in the
light of other material which could assist in arriving
at their scope. Thus, for instance, if S.R.O. 3315
cont1J.ined a specific proviso excepting from the saving
as regards "ohings done" the obligation, say, to pay
duties of custmns, it could hardly be contemled that
as the imports under pre-transfer contracts should be
deemed to be authorised even if the goods arrive subsequent thereto, they should be exempt from the payment of duty. No doubt there is no such express
provision but such a situation can also arise by necessary intendment.
The right to exemption from payment of duty
claimed by the petitioners would therefore have to
depend on the proper interpretation of the relevant
notifications, because as already seen as the Sea
Customs Act and the Tariff Act, etc., having been
extended to Pondicherry territory, etc., from and after
November 1, 1954, prima facie duty would be payable
on the import. We have already pointed out the
inter-relation between S.R.0. 3314 and 3315 which
were issued on the same date and by virtue of the
same provisions and power. Paragraph 6 of S.R.O.
3314 which provided for the continuance of the previous existing laws ran:
(I) (1q6r] 1 S.C.R. 305.
54
Ayyangar ].
French lndia
Importing Corporation, Delhi
v.
Chief Controller of
Imports 0- Exports
Ayyangar J.
422
SUPREME COURT REPORTS
[1962)
"All taxes, duties, cesses or fees which, immediately before the commencement of this order were
being lawfully levied in the French Establishments
or any part thereof shall, in so far as ·such levy
has not been discontinued by any of the laws extended to the French Esta.blishments by the French
Establishments (Application of Laws) Order, 1954,
continue to be levied and applied for the same purpose until other provisions a.re made by a competent
Legislature or authority".
This would be some indication that taxes, duties,
cesses and fees imposed by reason of the extension
to that territory, of Indian laws under the French
Establishments (Application of Laws) Order, 1954,
(S.R.O. 3315) would .be operative from and after
November 1, 1954. On November 1, 1954, the Government of India appointed a Controller oflmports and
Exports for the French Establishments and paragraph 4 of that notification also contained the
following:
" As regards orders placed outside the Establishments and finalised through the grant of licence by
the competent French Authorities in accordance
with the Laws and Regulations in force prior to 1st
November, 1954, licence-holders are advised to
apply to the Controller of Imports and Exports for
validation of licences held by them. No fees will
be charged for these applications".
This notification, though it has no statutory force,
was obviously part and parcel of S.R.O. 3314 and
3315, in so far ,as these related to the administration
of the Import and Export (Control) Act, the Sea Customs Act and the Tariff Act and would therefore
throw considerable light on what was intended by the
framers of S.l~.O. 3315. The effect of this notification
was that the authorization gmnted by or the permission acquired from the French authorities was made
to serve the same purpose as the grant of a licence
to import under the Import and Export (Control)
Act and nothing more. If its effect was in terms confined to this, there could be no contention that goods
imported in pursuance of the authorization should be
exempted from customs duty.
2 S.C.R.
SUPREME COURT REPORTS
423
Besides this, we might also draw attention to para-
'96'
graph 17 of the Articles of Agreement dated October
French India
21, 1954, under the terms of which the transfer of Imp0>ting corPondicherry to the Union Government was. effected. porntion, Delhi
No doubt, that was an agreement between two
v.
Governments whose terms and covenants are not Chief Controller 01
' t' ' bl ·
· · 1
b
h t
SR 0
Imports & Exports
3us 101a e m mumc1pa courts ut as t e wo . . s.
__
themselves proceed on the basis of this agreement and
Ayyangar J.
have been issued by virtue of the authority acquired
by the Union Government under the Agreement, a
reference to the terms thereof would be pertinent for
understanding the scope or intent of the provisions in
these two orders-S.R.O. 3314 and 3315. Paragraph 17
of the Agreement-dated October 21, 1954-which has
been referred to also by Subba Rao, J., in the Universal
Imports Agency's case(') in support of the position
that the authorization under the French law to effect
importation of goods into Pondicherry was tantamount to and had the same effect as the obtaining of
a licence under the Import and Export (Control) Act,
1947-expressly made provision for the Government
of India applying to the Establishment the relevant
Indian laws relating to the imposition of customs and
other duties in respect of goods which entered the
port after November 1, 1954. It reads:
"All orders placed outside the Establishments
and finalised through the grant of a Licence by
competent authorities in accordance with the laws
and regulations in force, prior to the date of the de
facto transfer, shall be fulfilled and the necessary
foreign currency granted, as far as the goods are
imported within the period of validity of the relevant Licence.
The goods shall, however, be liable to
customs duty and other taxes normally leviable at
lnd'
"
ian ports ................... ..
As we have already pointed out, this is exactly what
is sought to be achieved by the conjoint operation of
paragraph 6 of S.R.O. 3314 and the extension of
fiscal laws to Pondicherry effected by paragraph 3 of
S.R.0. 3315. It is precisely this that is also brought
out by paragraph 4 of the notification dated November 1, 1954, extract.ed earlier. In the circumstances
(1) [1961] I S.C.R. 305.
424
SUPREME COURT REPORTS
[1962]
'?61
it looks somewhat curious that the petitioners now
French India
before us, who as interveners in the petitions by the
ImporUng Coz- Universal Imports Agency, etc., supported the invokporntion. TJ'lhi ing of para. 6 of S.R.O. 3314, or Art. 17 of the Arti-
.
v.
cles of Agreement and para. 4 of the notification
Chief Controller 01 dated November 1, 1954, as an aid to the eonstruction
Impoifa '~ Expnzts of the words "things done" in para. 6 of S.R.O. 3315
Ayy;,;;;., 1. -the Government. resisting their use as an aid, should
now take up the position that these materials are
irrelevant for determining the scope of those crucial
words. In our opinion the petitioners are not entitled
to have their goods imported into Pondicherry after
November 1, 1954, without payment of duty notwithstanding that the contracts, by reason of which the
goods were imported, were entered into or the shipment took place before that date.
The result ia that the petition is allowed and the
orders of the Government, of the Central Board of
Revenue and the Collector of Customs are quashed
only in so far as they impose a penalty on the petitioner for importing goods without a licence under
the Import and Export (Control) Act, 1947, and the
Import Control Order. The respondents were entitled
to demand and to enforce the payment of customs
duty and the relief prayed in the petition in so far as
it relates to the quashing of the order in that respect
and the refund of the duty collected, fails and is
rejected.
In the circumstances there would be no order as to
costs.
Das Gupta f.
DAB GUPTA, J.-We agree that in view of this
Court's decision in M/s. Universal Imports Agency v.
The Chief Controller of Imports and Exports (') the
petitioners are entitled to relief as against the order
imposing penalty for importation of goods into Pondicherry, even though the actul importation took place,
after November 1, 1954, as the contract in pursuance
of which the importation took place had been concluded prior to that date. We are not able to agree
however that the position is different as regards the
(1) [1961] I S.C.R. 305.
2 S.C.R.
SUPREME COURT REPORTS
425
petitioners' prayer for relief against the levy of cus-
'961
toms duty on this very importation. Wit,h great
hench India
respect to our learned brethren, who have taken the rmpoding c,,,_
contrary view, we are of opinion that as long as the porntion, Delhi
Universal Imports Agency case(') is not held to have
v.
been wronglv decided we are bound by the authority Chfrf Control!" 0!
f h
d · '.
} l'd, h
h
· :
t" lmpcrts & Exj,arts
o t at <'CJSIOn to 10
t at t e petitioners are en I__
tied Lo relief agltinst the levy of customs duty as
Das Gupta 1.
well. In :tll the three petitions which were before the
Court in the U nivcrsal Imports Agency Case, the
petitioners had entered into firm contracts of purchase by import with foreign sel!Prs, bPfore the date
of merger of Pondicherry with India; in all the cases,
the goods reached the destination, the port of Pondicherry, after the date of merger. By that date (which
was November 1, 1954) however the entire administration of Pondichcrry had become vested in the Government of India, but Pondicherry still remained a
foreign territory.
Under s. 4 of the Ii'oreign J urisdiction Act, an order had been made on October 30,
1954, being notification S.R.0. 3315, in consequence of
which the Import and Export (Control) Act, 194 7, and
the Sea Custunrn Act, 1878, along with several other
Indian statutes became laws in force iu Pondicherry.
Para. 6 of this order was in these worda:-
"Unless otherwise specifically provided in the
Schedule, all laws in force in the French Establishments immediately before the commencement of
this order which corresponds to the enactments specified in the Schedule shall cease to have effect,
save as respects things done or omitted to be done
before such commencement."
When the goods arrived at the Port of Pondicherry they were confiscated, on the ground that they
had been imported without licence. But an option
was given to pay a penalty in lieu of confiscation.
The petitioners paid the penalty and then came to
this Court for relief.
In making the order of confiscation and giving an
option to the petitioners to pay penalt.y in lieu of confiscation the Collector of Customs proceeded on the
(l) [1961] I S.C.R. 305.
Frenelt India
lniporting Cor~
poration, Delhi
v.
426
SUPREME COURT REPORTS
[1962]
basis of s. 3(2) of the Imports and Exports Trade
(Control) Act rea.d with s. 67(8) of the Sea Customs
Act. The ground on which relief was sought from this
Court was that to this act of importation, the Indian
statutes mentioned in notification S.R.O. 3315 did not
:hief Co~t,o!ler of apply because this was "a thing done" before the
mports '~ Expoils commencement of the order. If this contention sucDas liupta 1. Cf'eded, there was no escape from the conclusion that
the order of confiscation had no legal basis, for the
laws in force in the French Establishments regarding
the importation of goods into Pondicherry did not
require such licence. The controversy before the
Court therefore was whether the import was or was not
"a thing done" within the meaning of the saving provisions of para. 6 of the order. On the one hand, it
was urged that only the conclusion of the contract
was "a thing done" before the commencement of the
order and the importation-the bringing of the goods
across the customs barrier at Pondicherry portwhich was the mere consequence of the contract could
not, without undue strain on the language, he said
to be a thing done before the commencement of the
order. Against this it was urged on behalf of the
petitioners that the words "things donn" included
not only the things actufl.l!y done and completed, but
also their consequence. The majority decision of this
Court accepted the petitioners' conlention and also
held that an import was the legal consequence of the
contract that had been entered into by the petitioners
with the foreign dealers and so where the contract
was concluded before the date of commencement of
the order, the import by bringing the goods into
Pondicherry Port was also a "thing done" before the
commencement of the order. It is helpful in this connection to re-read what was said by our brother Subba
Rao, J., speaking for the majority. After setting out
the relevant facts he proceeded to say:-
"On the said facts a short question arises w hether paragraph 6 of the Order protects the petitioners.
While learned counsel for the petitioners
contends that "things done" take in not only things
done but also their legal consequences, learned
2 S.C.R. SUPREME COURT REPORTS
427
counsel for the State contends that, as the goods
r96r
were not brought into India before the merger, it
F renc!i India
was not a thing done before the merger, and thereImpo.i;ng c,.,.
fore, would be governed by the enautments specified pornUrn, Delhi
in the Schedule. It is not necessarv to consider in
v.
this case whether the concept of i~port uot only Chi'/ Contrnller of
takes in the factual bringing of goods into India, Imports & Exports
but also the entire process of Import commencing
Das Gujita ].
from the date of the application for permission to
import and ending with the crossing of the customs
barrier in India. The words "things done" in
para. 6 must be reasonably interpreted and, if so
interpreted they can mean not only things done
but also the legal consequences flowing therefrom.
If the interpretation suggested by the learned counsel for the respondents be accepted, the saving
clause would become unnecessary.